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The Swedish rental market (and new rules) made simple

Looking to become a landlord or wanting rooms for rent? The Swedish market is a jargon-filled jungle with seemingly more rules than properties on offer. With new laws introduced this year, Sarah Foxen-Stjernswärd from Residensportalen explains everything you need to know.

The Swedish rental market (and new rules) made simple

Put simply, expats that navigate the rental market and get the best results are those who quickly accept and adapt to how it works in Sweden.

People who have a difficult time are often those who hold onto how things are done at home and work on those principles.

PHOTO GALLERY: Top five tips – looking to rent in Sweden

"What you need to understand is that Sweden doesn't have a market conducive for investment properties," Foxen-Stjernswärd says.

"Instead, it's dependent on Swedish owners' mobility and willingness to rent out their properties. That means limited choices and the fact that rental levels can be quite high, since landlords need to break even on their investment."

A law change in February this year, however, is benefitting rental homehunters with better terms for landlords, which has resulted in an increase in properties on the market for rent.

New rules on rent charges for sublets

For owned property (bostadsrätter, ägarrätter and houses) rent charges can now cover operating costs including monthly fees paid to the cooperative housing association (bostadsrättsförening), utilities, as well as a premium for wear and tear.

While the law doesn't specifically mention mortgages, property owners are allowed to charge for the "cost of capital", which is at the time of writing is considered around four percent of the property's market value.

If the property is a hyresrätt, the owner is allowed to charge their own rental costs plus an additional 10-15 percent if the property is furnished.

New rules for notification

For privately owned properties, the tenant may give one calendar month notice and the landlord may give calendar month's notice regardless of agreed upon lease term. In addition, tenants cannot assume that rental contracts are extended automatically and they must move out at the end of the contract even if they haven't received any formal notice from the landlord.

According to Foxen-Stjernswärd, the new laws have had a positive effect and fears of rental price increases have amount have amounted to nothing. In short, it's a huge market win.

"In comparison with 2012, we have experienced an 163 percent increase in landlord registrations this year to date, with a 21 percent increase in September alone," she says.

"We have noticed that expats have significantly more to choose from and have not noted price increases since many of those who rented out their properties prior to the law change charged market price anyway."

How Residensportalen can help

Since 2003, the Stockholm-based letting agency offers you a cutting edge tool to find your next home in Sweden.

With properties across the country, you can register for free, create a profile and browse the best rentals on the Swedish market.

Additional services include contract brokering, inventory documentation and property inspection.

Article sponsored by Residensportalen

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PROPERTY

INTERVIEW: ‘Most foreigners in Sweden don’t know they can get back excess rent’

In Sweden, people subletting apartments are not allowed to charge more in rent than they themselves pay. But foreign subtenants don't always know this. We asked Roland Sjölin, lawyer at the Swedish Tenants' Association, about how to get back excess rent.

INTERVIEW: 'Most foreigners in Sweden don't know they can get back excess rent'

More and more of the people asking the Swedish Tenants’ Association, Hyresgästföreningen in Swedish, for help with excess rent are foreigners, Sjölin told The Local in an interview.

“The problem is that if you’re coming from another country, and you’re subletting an apartment, you’re probably not familiar with the rules in Sweden, because in other countries, it might be okay to overcharge your tenants.” 

He said that clients from India in particular seeking help from the association were now “very common”. 

“Many people come here to work as engineers in the IT sector and then have to rent somewhere,” he said, adding that as a group Indians appeared to be “very aware of their rights.”

Sweden’s rental sector is heavily regulated, with first hand contracts negotiated between landlords and the Tenants’ Association, and the rent that can be charged for second-hand contracts limited to only a small fraction above what the first-hand renter pays. 

“You’re not allowed to make any profit subletting an apartment in Sweden,” Sjölin explains. “You can only charge the subletting tenant the same rent as you [the first-hand tenant] are paying to your landlord, and then you can add the costs for internet and electricity, and perhaps a parking lot, if that is included.” 

Tenants’ Association lawyer Roland Sjölin. Photo: supplied.

You can also add a påslag or “markup”, if you are renting out the apartment fully furnished, but this cannot exceed more than 15 percent of the rent. 

That doesn’t mean that most landlords follow the law. The competition for rental apartments, especially in Stockholm, is so intense, that unscrupulous sublet landlords often try to get away with charging well over the legal amount, charging what is known in Sweden as ockerhyra, or “excess rent” and hoping that their tenants are too desperate to complain.  

What many foreigners do not realise is that even after the rental period is over, they can still get back any excess rent they have paid by applying to the Rental Board or Hyresnämnden, which functions like a court judging rental disputes. 

“If you have the evidence then it’s fairly easy,” Sjölin said. “I get a new case every second week on repayment of unfair rent, and I think that I win most of them.” 

“Nowadays, you can get paid back excess rent up to 24 months back in time, so people tend to get more money,” he added. “In some cases, they can get 200,000 kronor. In other cases, perhaps it’s only 30,000 kronor or 60,000 kronor. It depends on how long you have rented the apartment, and how excessive the rent you’ve been paying has been.”

The first step is to establish what would have been a fair rent, either by asking your landlord what they themselves pay directly or by checking with the Tenants’ Association.

“Because we negotiate most rents in Sweden, we normally know what the firsthand rent is,” Sjölin explained.

Then you need to collect together your evidence.

“It’s a good thing to have a written contract and also papers from your bank showing that you paid rent every month, and perhaps photographs of the apartment, so the rental board can get an idea of the apartment you were renting and what would be a fair rent, and also the termination for the contract so you can show the court how long you’ve been living in the apartment.” 

But Sjölin underlined that since Sweden has free burden of evidence, none of this is essential. 

“Even if you’ve been paying in cash, if you have witnesses who can testify what you were paying each month, you still have a chance of getting your money back. It’s a bit more tricky, but I’ve won two cases like that this year.” 

People in Sweden, he explained, tend to wait until the rental period is over before seeking to get paid back excess rent rather than challenging their landlord while they are still living in the apartment. 

“You don’t have any legal protection for your home for the first two years, so if you bring the matter up with the person you’re renting the apartment from you risk losing your contract and having to move out, so most people wait until they’re supposed to move anyway,” he said.

If you apply to the rental board for a refund close to the day you move out, you can then make your landlord pay back all excess rent paid in the 24 months leading up to the date you contacted the rental board.

If you are a member of the Tenants’ Association, you can contact them and ask for help with your application, but there are also specialist companies, like Orimlig Hyra AB who will buy your case off you and give you a refund within 48 hours, saving you a long wait in exchange for a cut of the money reclaimed. 

Sjölin said that the rental board normally took about 8 months to come to a judgement, but that if the person with the first hand contract appeals, that could extend the waiting time by between six months and a year.

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